Mumbai: In a far reaching decision which will reform the long pending multi-layered registration process for foreign portfolio investors (FPIs), market regulator Sebi on Wednesday proposed new norms to simplify and rationalise the existing regulatory framework by easing operational constraints and compliance requirements.
As many as 57 circulars and 183 FAQs pertaining to FPIs issued over the years have been merged into new regulations and a single circular, Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi told mediapersons here following a board meeting.
The other decisions taken included for simplifying and expediting the registration process and easing compliance requirements for FPIs, while the broad based eligibility criteria for institutional foreign investors has been done away with.
On reviewing the risk profiling of the FPIs, Sebi has decided that FPIs may be re-categorized into two categories - Categories I and II - instead of the present requirement of three categories.
Registration for multiple investment manager A(MIM) structures has been simplified, and considering that central banks are relatively long-term, low-risk investors directly or indirectly managed by governments, it was decided that central banks that are not membersof Bank for International Settlement (BIS) will also now be eligible for FPI registration.
The entities established in the International Financial Services Center (IFSC) would now be deemed to have met the jurisdiction criteria for FPIs, Tyagi said.
KYC documentation requirements for have been simplified for the FPIs. They will now be permitted off-market transfer of securities which are unlisted, suspended or illiquid, to a domestic or foreign investor, while offshore funds floated by Indian Mutual Funds shall now be permitted to invest in India after obtaining registration as FPI.
The requirements for issuance and subscription of Offshore Derivative Instruments (ODIs) have also been rationalised.
The market regulator also reviewed the rules for listing of start-ups. It reviewed rules for the innovators growth platform (IGP) on which start-ups are listed.
Besides, the Sebi board approved the norms for migration of companies listed on the IGP) to the regular trade category of the main board.
The key proposals approved by the Board include that a company should have been listed on the IGP for a minimum period of one year and the number of shareholders should be minimum 200 at the time of making the application for trading under regular category of main board.
Moreover, the company should have profitability/net worth track record of 3 years, or have 75 per cent of its capital as on the date of application for migration held by Qualified Institutional Buyers in accordance with the regulations for main board listings.
The minimum promoters' contribution shall be 20 per cent which shall be locked-in for 3 years. The period of earlier lock-in of 6 months served at the time of listing on IGP shall be deducted from the stipulated lock-in requirement of 3 years.